Are you thinking about starting a new business this year? Understanding your tax obligation can be critical to the success of your business. When you start a new business, you need to know about income taxes, payroll taxes and much more. Here are five tips that can help you get your business off to a good start:

Business Structure. An early choice you need to make is to decide on the type of structure for your business. Forming an LLC is helpful for asset protection, but does not dictate the business structure. Your LLC can be structured however you choose. The most common types are sole proprietor, partnership, S-corporation, and C-corporation. The type of business you choose will determine which tax forms you file.

Business Taxes. There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. In most cases, the type of tax your business pays depends on the type of business structure you set up and the products that you sell. You may need to make estimated tax payments. If you do, you can mail payments with estimated payment vouchers, or use IRS Direct Pay online.

Employer Identification Number (EIN). You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online and get your EIN in minutes.

Accounting Method. An accounting method is a set of rules that you use to determine when to report income and expenses. You must use a consistent method. The two that are most common are the cash and accrual methods. Under the cash method, you normally report income and deduct expenses in the year that you receive or pay them. Under the accrual method, you generally report income and deduct expenses in the year that you earn or incur them. This is true even if you get the income or pay the expense in a later year.

Employee Health Care. The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. You may be eligible for the credit if you have fewer than 25 employees who work full-time, or a combination of full-time and part-time. The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

If you are starting a new business and would like to discuss the proper steps for setting it up, call us today to set up an appointment!